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2 Whole-Time Directors Must In Senior Leadership Team: RBI To Private Banks

RBI is of the view that the establishment of a senior team may also facilitate succession planning.

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RBI has asked private banks to have at least 2 whole-time directors.

"Given the growing complexity of the banking sector, it becomes imperative to establish an effective senior management team in the banks to navigate ongoing and emerging challenges", RBI said in a new directive.

Banks must ensure the presence of at least two Whole Time Directors (WTDs), including the MD&CEO, on their Boards. The number of WTDs shall be decided by the Board of the bank by taking into account factors such as the size of operations, business complexity, and other relevant aspects. 

In compliance with these instructions, banks that currently do not meet the minimum requirement as above are advised to submit their proposals for the appointment of WTD(s) under Section 35B(1)(b) of the Banking Regulation Act, 1949, within a period of four months from the date of issuance of this circular. 

Those banks which do not already have the enabling provisions regarding the appointment of WTDs in their Articles of Association may first seek necessary approvals expeditiously, so as to be in a position to comply with the requirements under these instructions. While ensuring compliance with the above instructions, careful consideration shall also be given to meet the requirements under other applicable statutory/regulatory provisions.

RBI is of the view that the establishment of a team may also facilitate succession planning, especially in the background of the regulatory stipulations with respect to tenure and upper age limit for Managing Director and Chief Executive Officer (MD&CEO) positions.


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